Community Banks Help Students Improve Their Financial Literacy

More than a decade ago, a Montecito, Calif. community bank began participating in a yearly tradition called Teach Children to Save Day. In partnership with schools, the institution helps ground pupils in money-saving habits. The bank later built on this success, launching a new year-round program called Banking on Our Youth.  The bank tea18-LB-556 blog photoms with schools and area non-profits to present economics and marketing classes, a Get Smart About Credit program, and bilingual instruction for parents.

This serves as but one example of community banks nationwide “going the extra mile” to help grade and high school students begin preparing for the increasingly complex financial world they will enter. Those efforts pay off. In two Arizona towns, a bank's financial literacy work helped student assessment test scores soar 70 percent.

Here are four additional examples of community banks teaming with area schools and other stakeholders to enhance the financial literacy of today’s youth. 

  • Allison Bartels, compliance officer at Leaders Bank in Oak Brook, Ill., teaches money management fundamentals, including saving, banking and budgeting for the future to students at many Chicago-area schools.
  • CCB Community Bank in Andalusia, Ala. has brought an online financial literacy program to area grade and high schools. Called Bonzai, the program replicates a video game, delivering budgeting and saving lessons in fun, interactive ways.
  • Nicholl Doggett, AVP Mortgage Lending at Leaders Bank, works with the organization Empowerment through Education and Exposure (EEE) to help Chicago high school students better grasp concepts like loans, types of bank accounts and the reasons for saving money.
  • Massachusetts-based Blue Hills Bank produced a musical play that travels to area K-5 classrooms, teaching kids about sticking to a money management plan.

By imparting financial skills to grade and high school youngsters today, community banks are helping forge a more financially literate society for tomorrow.

What one financial skill do you wish you had mastered back in grade or high school?

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What’s the Best Debt-Equity Ratio for Your Company?

Debt means different things to different people.  Most entrepreneurs and company owners view debt as an exceptionally valuable tool. However, they may struggle with the question of how much debt they should prudently absorb, relative to equity. 

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That relationship is called the debt-equity ratio. To determine your company’s debt-equity ratio, divide the amount of debt owed by company book value, or assets minus liabilities. A low debt-equity ratio of, for instance, 1, suggests your company is not fully leveraging the lower-cost financing tool of debt. A high debt-to-equity ratio of, say, 10, suggests the company is at risk from shouldering too much debt. Happy mediums between these extremes vary, depending on the type of company and its industry.

 Here are a few rules of thumb to help you determine the optimal debt-equity ratio to fund your company’s operations.

·     If your company is operating in an unsettled, even volatile business climate, it should aim at a lower debt-equity ratio. That’s because a sudden upheaval in the business environment could jeopardize ability to service debt.

·     If your company enjoys the benefit of holding long-term assets not susceptible to unpredictable value fluctuations, it can take on a higher debt-equity ratio. Examples of such assets include buildings and heavy equipment.

·     Your industry also can affect optimal ratios. If yours is a technology firm that invests in research, a ratio of 2 or lower is advised. Ratios between 2 and 5 are acceptable for manufacturing and publicly-traded firms.  Ratios higher than 6 are usually acceptable for banks and other types of financial companies.

 In general, getting debt and equity in optimal balance can help you gain needed loans, because bankers carefully review debt-equity ratios.

Would you like any additional information on the optimal debt-equity ratio?

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·     The Commercial Loan Term Sheet: An Important Step Before Getting a Loan 

·     Signs It’s Time to Invest for Business Growth

Don’t Let Security Measures Vacation While You Do.

The weeks before Labor Day are peak times of the entire year for family vacations. For many, that means taking along a laptop or notebook computer, and perhaps leaving behind an unattended computer back in the office.   18-LB-555 blog photo

Unfortunately, while businesspeople nationwide savor late-summer vacations, hackers work overtime to steal their data, infect their computers with malware and access their private information over public Wi-Fi networks. If like many workers you intend to tackle even limited company business while traveling, these threats can result in sensitive company data falling prey to the schemes of the unscrupulous.

Happily, a few simple travel security tips can help ensure your security doesn’t embark on holiday at precisely the same time you do.  Use these strategies to protect all the mobile devices you take with you from encroachment via cybernetic subterfuge.

  • Use your devices’ locking mechanisms. Locks available on most mobile devices allow you to remotely disable them by using a PIN code. Make sure this lock is enabled, in case you misplace or lose your device.  
  • Lock your computer at work to prevent unauthorized access. Ask a fellow employee to occasionally check your computer to assure it’s not being used.
  • Practice Wi-Fi Wariness. Free Wi-Fi provided by a hotel or restaurant can tempt business or pleasure travelers.  Too often, though, hackers closely monitor the networks hoping to hack into sensitive company or personal data. Never use public Wi-Fi to work on your company’s business.
  • Avoid social sharing of location. Many people like to post photos and reviews on social media as they travel domestically and internationally. Hackers keep their eyes glued to these types of social media updates, enabling them to know when you’re away from the office or that a hotel room is unoccupied and ripe for invasion.

Along with updating passwords, operating systems and using the latest anti-virus protection, these steps can help ensure you savor a safe, secure summer sabbatical. 

What’s your favorite security step while traveling on business or pleasure? 

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Reassessing Treasury Management Strategy Pays Off

Why is this a critical time to re-evaluate your treasury management strategy? We can start to answer that question by
providing a brief example. Imagine a company that enjoys $50 million in annual sales and borrows at 5 percent. Simply by
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accelerating by two days the pace at which it receives payment on its accounts receivables, this company could trim costs by approximately $20,000 yearly.

Today’s rising-rate environment and more volatile economy add urgency to many companies’ goal of regularly revisiting treasury management strategies. Strengthening your cash position can boost liquidity, reduce interest expenses and enable the company to more readily obtain business loans.  Following are a few suggested tips companies should consider in reframing approaches to cash management.

  • Streamline payments. A critical step in reexamining treasury management strategy is ensuring timely collections. Make sure it’s as quick, easy and convenient as possible for customers to pay your invoices. To that end, institute prescheduled automated clearinghouse (ACH) debits to streamline collections.
  • Re-examine liquidity needs. Given the rising interest rates environment, it may be that your day-to-day operating cash, reserve cash and investment cash needs have changed. After all, rising rates impact your company’s money market deposits and interest earning checking accounts, as well as time deposits and sweep accounts. Bring your cash liquidity in step with today’s reality.
  • Upgrade your technology. One result of revisiting treasury management can be use of more advanced tech tools and information reporting. New tech options can deliver enhanced transparency and increased control.
  • Communicate about change. After revising your treasury management strategy, communicate your hopes and concerns not just to your team but also your bank. Business bankers can shepherd companies through rising-rate challenges.

The only constant in life and business is change. That makes ongoing re-assessment of treasury management strategies a business imperative.

How could treasury management strategy re-evaluation benefit your company?

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Four Steps to Faster, Better B2B Decision-Making

It’s been said a poor business decision can often be avoided by getting the opinion of a respected, 
knowledgeable colleague. A business leader found this strategy generated twin benefits.  First, the act of discussing the matter enabled her to think through the issue more clearly.  Second, her colleague’s insight brought additional clarity for making a prompt decision, and a clear path forward emerged.  18-LB-553 blog photo

This example demonstrates good decisions can be made quickly.  In today’s fast-paced business world, making good decisions quickly has never been more critical. Markets move quickly, and astute, decisive responses are essential.

Here are four ways B2B leaders can make better, faster decisions.

  • Focus on mission and prioritize. If too many criteria enter into decisions, paralysis can result.  Instead, focus on your company's mission and goals, and prioritize. Eliminate non-essential considerations, honing in on the decision yielding the one or two most mission-critical results.
  • Recognize and eliminate bias. Every leader is susceptible to his own biases. Recognize biases can infiltrate your decision-making, and eliminate them. Stay as neutral as possible while weighing multiple views and arguments.
  • Where apropos, delegate. You needn't make every decision yourself. Delegating decision-making to your team achieves two goals: It frees you to tackle other concerns and empowers employees.
  • Realize there's no perfect answer. Decision making's goal is not to arrive at the perfect answer. Its goal is to move forward with a wise decision. Recognizing you must give up other “good” answers when arriving at your chosen approach can help you move forward expeditiously.

By following these steps, you can quickly make one of the best decisions, which is to move forward swiftly so you can take advantage of opportunities when they arise.

What's your own approach to making smart, prompt decisions?


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How to Bulletproof Your Hiring Strategies

18-LB-551 blog stock photoNot long ago, one of the nation’s Big Four accounting firms launched an unconventional approach to hiring top talent. It announced it would stage its own “film festival” comprised of employee-made videos. The festival encouraged creation of videos depicting why the firm is an exciting place to work, and drew more than 300 entries.  The strategy’s success was soon emulated by companies across many industries.

As this example demonstrates, creativity’s important in hiring the right employees. And never has it been more critical to recruit the best than in this era of near-historic full-employment. Companies should strive to solidify their practices because mistakes in hiring can cost hundreds of thousands of dollars in recruiting, training and replacing workers.  Here are a few ways to strengthen your hiring strategies.

  • Develop “Future-focus” job descriptions. Avoid describing a job opening as it exists today. Instead, craft a job description hinting at the growth the position offers. Tell what the job requires today, and also how it should evolve over time, enabling candidates to evolve with it. You’ll lure candidates seeking growth.
  • Create social media content attracting talent. Use your company’s presence on social media channels like Twitter and LinkedIn to forge a brand appealing to today’s talent. Also explore new social media sites designed to connect job seekers with opportunity. More than 91 percent of employers in a recent survey report using social media to hire. The percentage will surely grow.
  • Consider Artificial Intelligence (AI). Adopting cutting-edge technologies like predictive analytics and AI isn’t the future. It’s now. Employers are already seizing on these advances to sift through candidate pools and hire.

Embrace these approaches, and you'll go a long ways toward ensuring ironclad hiring practices. What goal could be more worthy in this era of fierce competition for talent?

What hiring “best practices” has your company found to be successful?

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The Commercial Loan Term Sheet: An Important Step before Getting a Loan

When visiting business banks to seek a commercial loan, it’s a good idea to request a commercial loan
term sheet.  A term sheet is a sign your loan request is moving forward.  It’s usually issued after the loan officer and credit officer have reached an accord on proposed terms, and before the full underwriting of the loan request. 18-LB-550 blog stock photo_cropped 

Commercial bankers use these non-binding documents to achieve a number of goals. First, a term sheet is meant to give the loan applicant a sense of the parameters and terms of the loan, should it be approved. Second, a term sheet provides the loan applicant the assurance her loan request has been formalized. And third, the offer of the term sheet is a signal to the borrower she can submit a deposit, and doesn’t need to shop other banks to determine if they can better the offer the term sheet lays out.

Here are a few ways commercial loan term sheets help your banker serve you better:

·         Term sheets are sometimes called conditional commitment letters. They are not actual commitment letters. These documents do not legally bind lenders to proceed. However, they do demonstrate lenders’ interest in making commercial loans. They also provide good faith estimates of loan terms.

·         The term sheet should summarize the primary terms and options, identifying the prospective borrower and the lender, and listing terms that start with the loan amount and include the interest rate, maturity, collateral and fee.

·         The term sheet is written in specific non-binding language. That language states that after undertaking due diligence, the lender can turn down the loan request. However, a term sheet is often a positive indication the loan will be granted.

Borrowers usually collect multiple competitive commercial loan term sheets from banks. They should also learn as much as possible about the loan-closing records of banks from which they’ve sought term sheets.

What questions do you have about commercial loan term sheets?

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Four Vital Techniques to Successfully Scale Your Company for Growth

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At its outset, a Michigan healthcare staffing company provided contingent staffing for clients’ short- and long-term personnel needs. But its owner knew her company needed to reap greater efficiencies to grow. She altered the company’s business model, changing it into an enterprise providing employees solely for permanent positions. The result was an 80 percent overhead cost reduction, and a far more profitable company.

To position for long-term success, owners must ensure revenue growth outpaces expense growth. That requires scaling operations. Adjusting business models is among ways company owners successfully scale operations. Keep reading to learn four of the most recommended strategies to successfully scale your company for growth.

  • Keep end goal clearly in mind. Successful scalability requires owners take “big picture” views of their ultimate goal. Do they want to build a company to support their life? Or do they wish to create a company they can sell? The end game must be kept in sharp focus to enable successful scaling.
  • Decide how to fuel growth. To effectively scale, owners must determine how they plan to grow. For some, the answer is to gain early investment. Others seek strategic guidance from outside experts to propel their companies to a point where taking on investors or merging with others makes sense.
  • Strive for repeat business. Companies that must regularly find new customers expend far more resources than those enjoying repeat business. To successfully scale operations, owners must plan ways to sell more to current customers, thus growing revenues without continually finding new buyers.
  • Stay open minded on financing. Getting bigger often requires adding physical space or hiring more staff. This requires capital. Gaining scalable operations demands staying creative in how to gain financing.

Keeping an eye on the prize, maintaining a plan and being creative all enhance scalability, ensuring your company has the capacity to grow.

How are you scaling operations for growth?

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Why Small Companies Thrive with Community Banks

Recently, a New Jersey community bank furnished a construction and renovation loan to a nearby historic estate.  The loan helped the estate’s owners build a new ballroom. Working with the bank, the owners gained more than a loan. The bank’s knowledge of the local market and construction industry helped them create a ballroom well matched to the area’s weddings market, ushering in increased lucrative summer bookings. 18-LB-548 blog photo

This a perfect example of why small companies – whether manufacturers, car dealers, tech or law firms, independent stores or others -- thrive working with local community banks. Local market knowhow and willingness to view customers as neighbors, not numbers, help community banks provide intangibles that go beyond lending.

Here’s how community banks help small companies flourish:

  • Community bankers don’t forget that as small companies bloom, so does the nation’s economy. They are, after all, local businesspeople themselves. As a result, small companies are more likely to enjoy a service-oriented partner willing to listen, communicate and lend.
  • Community banks answer to Main Street. Larger banks answer to Wall Street shareholders. However, community banks are deeply engaged in their towns, making them more accessible, knowledgeable and responsive to customers.
  • Timely capital access can spell the contrast between business success and failure. Fast loan decisions help small firms get a leg up on rivals.  Community bank loan decisions are made locally, so lending is often more timely.
  • Because they build relationships with small business customers, community banks are more ready to loan. A 2017 survey by the Federal Reserve Bank of New York found large banks approved just 58 percent of applicants, whereas small banks (many of them community banks) approved 76 percent.

Counsel.  Capital.  Community focus.  All these community bank benefits help small companies thrive. Is yours among those flourishing with help of community banks?

Which community banking benefit is likeliest to help your company bloom?

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Does Your Bank Go the Extra Mile?

A Midwest distributor saw an opportune moment to move into the California market.  It realized it would have to find a new West Coast bank. But to company officials’ surprise, its long-time local bank decided to follow 18-LB-546 blog photothe company to the Golden State and open west coast branch. There, the bank continued to support its customer, helping it streamline reporting and structure.

Not every business bank will literally go the extra mile on customers’ behalf. But in many ways, a bank can figuratively go the extra mile by leveraging expert treasury management process services on clients’ behalf. Here are three examples:

  • Personalized communication. It’s important to communicate on a personal level to build rapport. For instance, Leaders Bank phones customers with ACH Block and filter transaction exceptions for “approve or deny” authorizations. This “person-to-person” outreach enables Leaders to better understand customers and their needs, and strengthen the relationship.
  • Fraud consultation.  Every passing day brings new ways fraud can be perpetrated with growing ease.  A bank going the extra mile will consult with customers regarding fraud exposure on an on-going basis. The bank can help to make sure that fraud mitigating controls are in place to minimize the potential for fraud and to avoid losses.
  • Facilitating smooth transitions.  One bank using a third-party vendor arrangement to simplify customers’ acceptance of credit card payments decided to change vendors. It reached out to the customers to help them segue to the new vendor. The credit card payment process is technology intensive, so the bank also trained customers on alternative card payment processing, which in some cases led to savings.

When banks go the extra mile for you in treasury management process services, it demonstrates their genuine interest in your financial vitality. Is there an example you can share when a bank has gone the extra mile for you?


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